A shocking reality according to Harris poll revealed that nearly 4 in 5 millennials (79 percent) are not currently investing in the stock market.
If you don’t know who the Millennials are, they are the born between 1980 to 2000. This generation is reshaping the world economy from consumerism to a “sharing economy“.
However, let’s don’t get lost in other topics but focus on the big problem here; this generation isn’t investing in the market stock.
Why is it shocking?
Because the stock market is the best tool to increase a person wealth. It’s important to make our money to work hard for us if we wish a comfortable retirement.
Did you know having invested US$1,000 in 1965 in Berkshire Hathaway(Warren Buffett’s holding company) your investment would be worth today more than US$10,000,000. That is what I call; “The easy way to wealth.”
Ok, Ok, you’ve got a fair point, Warren Buffett is the best investor ever.
So let’s have a look the return of the S&P 500 over the last 100 years. This index mirror the general US economy, it’s a safe bet to grow your wealth above far above the inflation rate.
Math never lies. US$1327 invested in 1915 would be worth US$17,555 today. 1,222% or 12% per year. Well, pretty good.
Having kept the money under a mattress in the last 100 years would have been a catastrophic idea. Hopefully, your grandfather has been smarter and invest in some solid business. The value of the Dollar, or any other FIAT currency is constantly eroding.
This isn’t going to stop, but accelerate considering the huge amount of printing in the last decade.
Eroding Dollar-Value
I know, BORINGGGGGG. Sorry Pal, but I feel the importance in stressing about how essential is to invest in the market stock to grown one’s wealth. Keeping the money on your bank saving account isn’t going to make you enough wealth to retire comfortably.
Before learning how to invest with common sense, let’s understand the reasons why Millenials are out of the market stock:
- Fear of a repeat market crash like in 2000 and 2008 (I was hit hard too, but I never gave in).
- No savings – Salaries have been stagnant for the last 10 years but the cost of life has increased steadily.
- No Trust – Banks, insurances and financial advisors have got a bad reputation. I’m not surprised millennial don’t give their cash away.
- Too much noise – There is too much information out there and everyone sounds like an expert. Confusion is part of the game and keeps first-time investors away from the market.
- Complicate – Investing seems difficult, almost like having another job. Who wants another job?
I feel your pain, Pal. You are right to keep all your money in cash, better safe than sorry. It’s not your fault if no one helps to clear the way into the investing world. No worries, I’m here to help.
It’s essential for you to take the first baby steps without risking your savings. No need to learn about financial statements, cash flows or any other accounting jargon. Investing should be fun, simple and allow everyone to participate.
Today I am going to make investing very simple by applying common sense!
COMMON SENSE INVESTING
When I invest for the long term, I always use common sense above any other skill. If a business makes sense, it will grow to do wonders to my portfolio.
In your daily life, you’ll find all the beautiful companies where you should invest your money.
“Rudy, What the hell are you talking about?”
Think for a minute. Every day you are using some brand, probably years you have been a loyal customer. Make sense to invest in the company manufacturing your favorite products. You trust the brand, you use the product because you get value for your money.
These companies have strong brands, a solid market share and competitive advantage in most cases. This is why they have been around for a long time.
Watch the video below and hear what Warren Buffett (second richest man in the world) has to say about “Competitive Advantage.”
Too theoretical, Pal? Here my daily morning routine so you can relate to the “common sense investing.”
I wake up and get a shower using “Dove” soup. Brush my teeth with “Colgate” toothpaste and shaved with a “Gillette” razor.
Time for breakfast, a cup of milk and “Kelloggs” corn flakes to start the day with energy.
Waiting for the Uber taxi to go out while drinking a “Coke” on my way.
It might sound like an advertisement, but I guarantee you that I don’t get paid from these brands.
In this short morning story, you might have recognized some well know brand. They have been around for decades, been part of our daily life, and the companies behind are well profitable offering a high return on investment to their shareholders.
- Dove —> Unilever
- Gillette —> Procter & Gamble
- Kelloggs —> Kelloggs
- Coke —> Coca Cola
These companies are reliable with excellent management and exceptional brands. They all pay dividends and have a long track record of increasing their shareholder’s wealth.
You can assume if they are been around for so many years, they’ll be around for the next10-20 years.
Some brainstorming for you, Pal; “What do you think, make sense to invest in them? Do you think your money will worth more in ten years time if invested in these companies? Will they be around in ten years time?”
The companies in the example above, are just a few of the many long-term investment opportunities in the market stock.
You only need to think about your daily routine and which products gravitate around your life.
Small exercise to get you started;
- Write down the products you use daily.
- Search in “Google” if the company trade on the stock exchange.
- Check the current share price and calculate the value growth for the last 30 years.
- Constant dividends, a good sign.
This is an excellent starting point to look for some good stock to own, and some few tips before you buy in:
- Is the stock price trading on the high or low side for the last 52 weeks. If so, why?
- Have a look at the sector as a whole. Is trending up or down?
- Buy at least eight companies in different sectors (tech, transport, banking, etc) so your investment is diversified.
- Buy when the stock market correct.
- Whenever you have saved some money, buy some more share. Known as “Dollar-Cost Averaging” strategy.
- Don’t watch the daily of the stock daily. The less you bother, the better.
- Never sell, just buy more and more forever. The only time you should sell is when you don’t use anymore the products of that particular company. Probably some better brand is taking market share.
These are just a few common sense tips when evaluating a company from a common sense perspective. Professional investors like Warren Buffet will go in details reading financial statements, but it isn’t necessary for first-time investors.
Common sense I’ve helped me to become a better investor over the years, and it’s the pillar of my investment strategy.
What are your thoughts? Have you ever invested in companies which you use daily? Please, comment below.
This is my opinion and you should do your own research before buying into any stock. The outcome is ultimately your responsibility.
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